WHAT WILL THE PROPERTY MARKET IN SYDNEY DO IN 2025?!

The property market has been on quite a journey over the past five years. Prices surged unexpectedly during the pandemic, cooled as life returned to normal, climbed again, and finally stabilized last year.

So, what’s ahead for 2025? Here’s what we predict for Sydney’s real estate market:

1. Uneven Growth

Expect significant variations across the market. Prices in one suburb, street, or building may soar, while others remain flat. Similarly, high demand for one type of property doesn’t necessarily translate to others.

In 2024, growth across Sydney’s market slowed. CoreLogic reported just a 2.3% rise in median dwelling values for the year, with a -1.4% decline in the last quarter. But these overall figures mask the reality: some suburbs have surged ahead, while others have stayed steady.

2. The Rise of Downsizers

Sydney’s population is ageing rapidly. By 2026, over 22% of Australians will be aged 65 or older, up from 16% in 2020.

Downsizers—often seeking low-maintenance, secure, and luxurious homes—are becoming a powerful market force, particularly for townhouses and apartments. However, a lack of suitable housing stock has limited their options.

This year, we expect to see a wave of new projects tailored for downsizers, spurred by zoning changes and easing construction costs. Developers are likely to cater to this cash-rich group, offering properties that combine privacy, convenience, and a touch of luxury.

3. Interest Rate Cuts Could Ignite Activity

High interest rates have weighed on Sydney property prices in recent years. After slashing the cash rate to 0.1% during the pandemic, the RBA increased it to 4.35% between May 2022 and November 2023.

Now, with inflation easing and unemployment edging higher, many economists predict rate cuts in 2025. This would benefit first-home buyers and upsizers, who rely heavily on financing. Lower rates could expand budgets, encourage more buyers into the market, and potentially drive prices higher.

4. Election-Year Uncertainty

Australia heads to the polls this year, likely before mid-May, and election years often influence the property market. Housing policy—especially around affordability—may become a central issue, affecting buyer and seller confidence.

Elections can lead to a “wait-and-see” approach from many, temporarily cooling the market. However, history shows this is often followed by a rebound. For example, after the unexpected re-election of the Morrison government in 2019, property prices surged—although some credit this to APRA’s relaxed lending rules rather than the election outcome itself.

5. The Return of Investors

Investors have largely been absent since 2020, but this could be the year they return, especially in suburbs within 10km of the CBD where rental demand is strong. Proximity to transport and amenities makes these areas highly attractive.

With population growth driving housing demand, and apartment prices in these suburbs offering good value (having risen more slowly than houses during the pandemic), investors may find opportunities for both rental income and capital growth.

In a world of uncertainty, residential property in Sydney could once again prove its value for long-term returns.

What do you think of these forecasts? Let us know your thoughts on the Sydney property market in 2025!

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